Gruber's downfall

American readers have no doubt been following the story of Jonathan Gruber, a 'liberal' (in the corrupted sense of the word) economist who helped put together Obamacare and has since been caught on tape saying that the legislation was deliberately convoluted because voters are "stupid".

I know Gruber for a different reason. By the end of 1990s it had become very clear that US revenue from tobacco taxes amply exceeded the healthcare costs associated with smoking-related diseases. The anti-smoking lobby therefore needed a new excuse to raise tobacco taxes and Dr Gruber was eager to provide it.

In a series of articles, Gruber set out a 'modern economic view of tobacco taxation' which took the concept of hyperbolic discounting and piled on a bunch of dubious assumptions. To put it very simply, he assumed that smokers didn't really want to smoke and secretly wanted the government to take them firmly in hand. In a 2008 article, he described smokers' latent desire for abstinence and compulsion:

First we develop the reasons that tobacco taxes should exceed the level of pure interpersonal externalities. In particular, we will focus on failures of individual self-control which lead to excessive smoking relative to desired levels. In such a case, tobacco taxation can provide a corrective force to combat failures of self-control... under the self-control model, tobacco taxes can make smokers better off by providing them with the commitment device they crave (but cannot find without government compulsion).

It is true that people tend to put more value on the present than the future, but Gruber's theory - though highly influential in tobacco control circles - went far beyond that. In his assault on Gary Becker's theory of rational addiction, Gruber assumed that smoking is irrational per se and that nobody really wants to smoke. By his logic, it was incumbent on wiser persons such as himself to administer compulsion to those dumb smokers. It was for their own good.

The theory was a clever and elaborate justification for illiberal paternalism under the veil of economics but, as I wrote in The Wages of Sin Taxes, its arrogant assumptions were bollocks.

It rests on the belief that, as Cummings puts it, “the government can increase individual welfare more efficiently than individuals themselves”. This is a proposition that can most charitably be described as debatable, but even if we accept the contention that the “future self” will one day regret smoking and eating too many crisps, it is not clear why we should take the hypothetical “future self” more seriously than the flesh-and-blood “today’s self”. Whose desires are real? The geriatric future self, with his regrets which require no sacrifice and no action? Or today’s self, with his revealed preferences of a lifetime’s smoking and overeating? It is easy to repent on one’s death bed, but there are enough examples of people going back to their old ways after making a miracle recovery for us to question whether the sentiments of the future self should carry more weight than the actions of today’s self. Can we really assume that people spend their whole lives as irrational beings and only become rational in their final days?

The future self is attractive to health campaigners because any words can be put in his mouth. Under their ventriloquism, he becomes a rational actor who desires only to eschew sinful pleasures. He might say that he enjoys binge-drinking and eating potato chips, but this is a form of false consciousness. Haavio (2007) took this logic a step further by adding a third group of people who are in denial about their lack of self-control. These “fully naïve individuals” would always oppose sin taxes, whereas the “sophisticated” individual would always vote for them. Thus, the ‘healthist’ worldview always triumphs; those who support it are sophisticated people while those who oppose it are fools. The very fact that they oppose sin taxes is evidence of their foolishness. Quod erat demonstrandum.

We now know that Gruber really does think that people are idiots and was most amusing to watch this smug little man make a snivelling apology in which he claimed that he insulted the American public because he wanted to look clever. You really should watch it.



And these are the comments that started it all...